Dr. Hession’s decision to run InterOil is an extraordinary development, and it’s one of the most important in InterOil’s history. Dr. Hession was perceived by many as the heir to the throne at Woodside two years ago, and his decision to join a company as small as InterOil will be a significant surprise to large companies in the oil and gas industry. Based on my due diligence, I believe Dr. Hession had opportunities to run much bigger companies than InterOil.
The content of the press release is very encouraging. Dr. Hession has obviously conducted thorough due diligence on Elk/Antelope and states that “the certified resource at the Elk and Antelope fields is sufficient for a multi-train development”. This external appraisal from someone with such an extensive exploration and development background adds tremendous credibility to the optimistic assessment of Elk/Antelope's size. Also, he directly addresses the Exxon deal by stating, “The monetization of PRL 15 is anticipated to be a transformational event for InterOil”. Obviously he has reviewed the terms of the transaction and has come to a very positive conclusion. This will go a long way towards alleviating the market’s asinine concern that somehow the transaction disproportionately benefits Exxon. In fact, Exxon is taking most of the risk while InterOil retains most of the optionality.
Possibly the most interesting and unexpected statement by Dr. Hession is, “The interest in energy development in PNG has never been greater and we expect to bring in additional partners to accelerate our activities.” It seems that InterOil finally has a deal maker at the helm, and this could expeditiously unlock billions of dollars in shareholder value. Also, there may already be additional deals in the works based on Dr. Hession’s statement.
Dr. Hession had an opportunity to publish conservative comments and set low expectations, but instead, with his reputation on the line, he revealed an extremely optimistic perspective, especially on InterOil’s near term catalytic path.